Governor’s budget proposal: Motor vehicle tax would be costly

Gov. Dannel P. Malloy’s proposed biennial budget would net the town an estimated $62,077 increase in state aid next fiscal year, but it could cost the town some $1.98 million in revenue during fiscal 2013-14. That revenue now comes from motor vehicle taxes.

In his budget, the governor proposes to exempt from local property taxes the first $20,000 of a vehicle’s assessed value. That means owners of vehicles with market values under $28,500 would pay no property taxes at all on theses vehicles, the governor said in his budget presentation.

The proposal would impact more than 90% of all motor vehicles, whether they are owned by residents or businesses.

Mr. Malloy said to ease the transition, municipalities could be allowed the option of providing this exemption, or a portion of it, for the tax year beginning July 1, 2013. After that, it would be implemented statewide beginning July 2014.

Making up for the shortfall would be nearly impossible, Weston First Selectman Gayle Weinstein said. “It would be horrendous,” she said. “We can’t have that.”

Ms. Weinstein said the amount of revenue the town could lose with the governor’s proposal is estimated at $1,977,614.

Of course, the governor’s proposal is a starting point for the state legislature, which will be working on the budget this session. The town’s Republican legislators have already expressed concern with and criticism for the Democratic governor’s budget plan for fiscal years 2014 and 2015.

While several forms of state funding are set to be cut, the governor is proposing “essentially doubling aid for roads,” Ms. Weinstein said.

The governor’s proposal includes a new grant to be provided to municipalities to offset any lost revenue from the elimination of the state grants — but not to offset the loss of motor vehicle tax revenue.

In his budget, the governor proposed a $50-million increase in the Education Cost Sharing grant for the next fiscal year, but Weston is not expected to see an increase. According to the Connecticut Mirror, 95% of this increase is expected to go to the state’s lowest-performing school districts.